Good governance leads to good performance

It creates an open and transparent system

It improves communication and breaks down
systematic barriers to flow of information
Good governance allows decision making based
on data. It reduces risk
Good governance helps in creating a brand and
creates comfort for all stakeholders and society
 Corporate governance is the set of processes,
customs, policies, laws, and institutions affecting
the way a corporation (or company) is directed,
administered or controlled.
 Corporate governance also includes the
relationships among the many stakeholders
involved and the goals for which the corporation is
governed.
 The principal stakeholders are the shareholders,
management, and the board of directors. Other
stakeholders include employees, customers,
creditors, suppliers, regulators, and the
community at large.
Corporate Governance refers to the system through
which the behaviour of a company is monitored and
controlled.
The significance of corporate governance is that in
modern economies large corporations are typically
associated with a division of labour between the
parties who provide the capital (i.e., shareholders)
and the parties who manage the resources (i.e.,
management).
According to KPMG, “Corporate Governance refers to a
system by which corporate entities, exercising
accountability to shareholders and responsibilities to
stakeholders are directed and controlled to achieve
sustainable improvements in shareholder prosperity.”

According to the Corporate Library, “Corporate

Governance refers to the relationship between the
shareholders, directors and management of a company, as
defined by the corporate charter, bylaws, formal policy and
rule of law.”
In the words of World Bank, “Corporate Governance is about
promoting corporate fairness, transparency and
accountability.”

Sir Adrian Cadbury in The Cadbury Report states, “Corporate

Governance is the system by which businesses are directed
and controlled.”

According to American Management Association,

“Corporate governance is about how suppliers of capital get
managers to return profits, make sure managers do not misuse
the capital by investing in bad projects, and how shareholders
and creditors monitor managers.”
“Corporate Governance is concerned with holding the balance
between economic and social goals and between individual and
communal goals. The governance framework is there to
encourage the efficient use of resources and equally to require
accountability for the custodian of those resources. The aim is
to align as nearly as possible the interest of individuals,
corporations and society.
The foundation of any structure of corporate governance is
disclosure. Openness is the basis of public confidence in the
corporate system and funds will flow to centers of economic
activity that inspire trust.”
-Sir Adrian Cadbury.
Peoples are more important than Processes

Rights and Equitable Treatment of Shareholders

Accountability to Shareholders

Interests of Other Stakeholders (Social Responsibility)

Role and Responsibilities of the Board

Integrity and Ethical Behaviour

Transparency in Disclosure

Discipline in Operations

The Effectiveness of Audit

 Globalization, Privatization, Deregulation, causing revolution of rising
expectations;

 Advancements in Information Technology and E-Commerce.

 Strategic Alliances, Mergers and Acquisitions.

 Social Responsibility, Social Audit and Societal Concerns.

 Business and Professional Ethics.

 Sustainable Development.

 Energy audit, Environmental Upgradation.

 Need for Excellence to cope up with fierce International Competition.

 Need to strike a balance between compliance with rules and company’s

need to perform, so that company’s performance is not stifled by over
regulation.
 Adequate disclosures and effective
decision making to achieve corporate
objectives;
 Transparency in business transactions;
 Statutory and legal compliances;
 Protection of shareholder interests;
 Commitment to values and ethical
conduct of business.
According to Chartered Institute of
Management Accountants (CIMA) ‘Good’
Corporate Governance:
 Reduces risk

 Stimulates performance

 Improves access to capital markets

 Enhances the marketability of goods and services

 Improves leadership

 Demonstrates transparency and social accountability.